Bob Filner Not Doing San Diego Any Favors by Not Releasing Pension Details

By not having an actual set of numbers that has been parsed through by the city auditor, the Filner campaign is doing San Diego a great disservice.

Last week the OB Rag sat down with Congressman and San Diego mayoral candidate Bob Filner, where he discussed in detail his version of a plan to fix the city’s pension system. During the interview he laid out the framework for what he says would be an effective and—most importantly–legal way to save the city money and bring down the debt problem generated from the underfunding of city worker pensions by former mayors Susan Golding and Dick Murphy.

Filner’s plan entails capping pensions at just under $100,000, renegotiating a labor contract with city workers for a period of five years with smaller salary increases than are called for in the current contracts, and by refinancing the city’s pension debt at a lower interest rate and for a 30 year term. According to Filner, combine all three steps and you get a savings roughly equivalent to the $963 million over 30 years that Prop B is estimated to save. Refinancing alone, Filner says, would save the city $550 million over the next 10 years.

Prop B, you might recall, is the “Comprehensive Pension Reform” initiative that converts all pensions for new city employees to a defined contribution 401(k) plan and imposes a salary freeze on city employee wages for the next five years.

I know………this is all terribly wonkish stuff. Bear with me…….

Last night, Democrats for Equality hosted a forum at the Joyce Beers Community Center in Hillcrest to talk specifically about Prop B. City Councilman Todd Gloria was there to debate Lani Lutar, the president of the San Diego County Taxpayers Association. I’ll let you guess which side of the argument each was on.

As noted, the talk centered around Prop B, which proponents say will save the city almost $1 billion over the next 30 years, while opponents say it will cost the city $54 million over the next five years. It all gets rather complicated, as this fact check analysis by the Voice of San Diego’s Liam Dillon shows.

Lutar says that Prop B must pass so that the city can not only shift from what is known as a defined benefit plan (pensions) to a defined contribution plan (401(k)), and so that the city can shift the risk from the city to city workers.

Lutar tried gamely to convince the audience that Prop B, whose biggest champion is mayoral candidate Carl DeMaio, was actually good for city workers, and that it created a certainty and stability in the pension system that would be good for the city. Except that it really puts an end to the pension system, and it leaves the futures of city workers subject to the stock market “like everyone else.”

Breaking it down to the basics: According to the City Auditor, Prop B will cost the city $13 million more over the next 30 years, and will result in an additional $54 million in costs for the city for fiscal years 2014-2016 due to a mandated acceleration in payments into the pension plans of older city workers.

Todd Gloria

Here’s where it gets really interesting and damaging to proponents of Prop B: According to Gloria, the City of San Diego currently has a budget surplus of $16 million. In fact, says Gloria, compared to Los Angeles and San Francisco, San Diego is in great shape financially.

In 2014, San Diego is currently projected to have a $2 million surplus. If Prop B is implemented in full force (no guarantee…..more in a minute) the fiscal impact on the city budget in 2014 will be a cost of $27 million, Gloria says. Combine that with the $5 million scheduled to be put into the system, and we have San Diego going from a $2 million surplus to a $20 million deficit.

“I just don’t understand why people are complaining when we save the city nearly $1 billion over 30 years. That’s money that goes back into the city’s coffers for road repairs and other city services,” said Lutar.

Perhaps it’s because that’s $54 million that can be put to work for San Diego in the near term without digging a massive hole in the budget.

Oh…….and there is no guarantee that Prop B will be implemented as intended. As Lutar herself admitted, the law will only allow the five year pay freeze to be the opening salvo in negotiations with the labor unions, and it can be overridden by a 2/3 vote of the City Council. So while DeMaio is “supporting certain candidates for the City Council” that will make sure the city doesn’t vote to override the pay freeze, it’s highly unlikely that after going without pay increases for the last five years that the unions will agree to an additional five years of no wage increases. That would be 10 years for city workers’ wages remaining stagnant.

Oh, yeah……..forgot to mention: City workers in 2009 already agreed to freeze their wages and give back certain pension and health benefits in order to help the city get its financial house in order. And it worked. The city currently has an A+ credit rating from Standard & Poor’s after having its credit suspended back in 2004.

But, Lutar says, under Prop B city employees are still eligible for annual pay bonuses. The city can still reward workers bonuses in lieu of pay raises should it see fit to do so during the pay freeze.

Lani Lutar

Prop B “is nothing but an effort to attack city workers and make their lives absolutely miserable,” Gloria said. “Carl DeMaio will not give city workers bonuses. What he wants is to make their lives so miserable that they eventually leave, and when enough of them leave, he can go and contract those services out to private corporations.” It’s all a part of DeMaio’s push to make San Diego the “Wisconsin of the West,” he said.

San Diego, Gloria says, has a pension debt problem and not a budget problem.

Which is where Bob Filner and his plan comes in. None of the talk on the night dealt with how to effectively deal with that pension debt that was incurred by the city councils led by Mayors Golding and Murphy. Filner has a very reasonable idea for how to do it: Refinance $1 billion of it for a 30 year period. I’m no expert, but it sounds like it could work. Lower interest rate combined with a longer term spells significantly lower payments than the city is putting in now.

Filner shared with us the outlines of his pension proposal, but he hasn’t submitted it to be combed over by the numbers crunchers to see just exactly what it would do and how much it could save. There are no official numbers.

So when I asked Todd Gloria why they didn’t discuss the refinancing aspect, he said that until there was a real nitty gritty analysis to look at they can’t present it as a legitimate alternative.

As it stands, San Diego voters aren’t really being offered a choice. City officials have done a lot of work to correct some of what was broken, but more needs to be done to reduce the escalating payments into the pension system over the next decade.

Bob Filner has what appears to be a truly viable alternative to Prop B, which is simply a bad plan for San Diego and San Diego city workers. But by his campaign not getting off its duff and presenting some actual numbers they are doing this city a real disservice. By not presenting and articulating a real alternative to Prop B that voters can parse through themselves, voters are going to feel compelled to vote in favor of a bad deal that’s designed to make civil service so unpalatable that the Carl DeMaio’s of San Diego will once and for all be able to fulfill their dreams of privatizing the entire city.

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Him not releasing the details is immaterial to me. I tried to watch him closely including his body language and he appears to me to be confrontational and a loose canon. I can’t imagine trying to have any type of discussion with him where you have a different opinion, he seems a little caustic …

They both are very caustic , edgy and sharp tongued ……, I would love to see them in a ring together for 3 minutes ….just 3 minutes soft boxing gloves a mouthpiece oh wait no mouthpiece i want to hear the $h*# talking ….Now throw Fletcher into the mix he could take them both at the same time ….

Status of the Colorado pension lawsuit. Hey, you’ll find this interesting, our Colorado PERA pension leader is oving out to California to head up the National Council on Teacher Retirement. California teachers makee sure you give him a warm welcome!

COLORADO PERA PENSION THEFT LAWSUIT SCHEDULE AND HOW TO HELP.

The group fighting the Colorado Legislature’s theft of contracted pension benefits (saveperacola.com) posted a Colorado Court of Appeals schedule on their website today (as follows):

“We have received notice of the following scheduled dates for the lawsuit:
4/23/12 – Appellees to Supplement Record
5/29/12 – Appellee’s Answering Brief
6/12/12 – Appellant’s Reply Brief

PERA and the State of Colorado are the appellees. Gary R. Justus et al are the appellants.”

Saveperacola also posted a request for help from Colorado PERA members, retirees and any others who support the rule of law in the United States. Saveperacola is raising funds for attorney fees to combat the theft of retirement benefits that were earned by PERA members over decades.

Are you a PERA member or retiree? Have you paid into PERA for many years? Do you expect the Colorado Legislature and Colorado PERA to honor their contractual obligations to you?

Well, your expectations are not grounded in reality.

It is pathetic, but the Colorado Legislature and Colorado PERA will not honor their legal commitments to you short of a court order. That has become quite clear during Colorado PERA’s political, legal and lobbying campaigns.

If Colorado PERA members and retirees do not act, our interests will be brushed aside.
In a nutshell, the Colorado Legislature and Colorado PERA are trying to avoid their debts to public employees. The Colorado Legislature has the ability to “define” a pension “crisis” into existence and then attempt to use that “crisis” to justify the breach of pension contracts.

The Legislature can create a funding “crisis” by skipping its annual required contributions to the PERA trust funds. For a decade the Colorado Legislature has done just that. It has ignored the level of contributions that it must make every year to the PERA pension in order keep it financially sound. This level of annual contributions (called the ARC) is determined each year by Colorado PERA’s actuaries.

To date, the skipped contributions exceed $3.5 billion. Just this week the Colorado Legislature is skipping in annual required pension contributions in order to provide $100 million in discretionary tax relief. Having ignored its obligations for years, the Legislature would like to compensate for its negligence by essentially stealing money from Colorado PERA members and retirees.

The Colorado Legislature and Colorado PERA are also trying to use the volatility of investment markets to justify their breach of contracts. Remember that Colorado PERA members and retirees are members of a defined benefit plan. They do not bear any “market risk.” In a defined benefit pension, “market risk” is borne by the sponsors of the plan, that is, the State of Colorado and Colorado local governments. The Colorado Legislature and Colorado PERA want to retroactively change the terms of our statutory pension contract.

Here’s a quote from the new post on the saveperaacola website:

“Remember, the bottom line here is that unless we prevail in this lawsuit, PERA is off the hook for keeping the promises it made to every member and retiree.”

What can you do? Go to the saveperacola.com website, click on the “Support” tab, and send them a contribution. Call or e-mail every PERA member and retiree you know and ask them send support. Call your public employee union representatives and ask them how they can stand idly by while the state attempts to breach its contracts with public employees. Their public sector union colleagues across the country are aggressively defending the pension rights of their members.

To follow developments in the Colorado pension theft lawsuit sign up as a Friend of Save Pera Cola on Facebook.

Have your friends sign up as Friends of Save Pera Cola. Copy this post and e-mail it to PERA members and retirees you know.

I support Filner’s proposal to refinance bond debt over thirty years. I also support another pillar of his unwritten proposal of capping pension payments.

I support both Filner’s, unwritten plan and Prop B. Filner’s, unwritten plan starts to fix the City’s current $2 billion pension debt, and Prop B’s plan to protect the taxpayers from future pension risk are both steps in the right direction.

Note; The past city councils were not lead under the weak mayor form of city management. The past city council’s hands are as dirty as each former mayor.
Note; Under Federal pension law, the mayors or city councils can not change the pensions or underfund without union agreement in a contract and a vote of the pension board and its three union leader members.

I’ll leave aside the discussion of what Filner is doing or should be doing, and note a broader point:

Prop B is unapologetically punitive and doesn’t work. To the extent we’re able to get the discussion to a healthier place of examining the range of available options that could actually work, we’ll be better off politically and economically.

It’s also interesting that in all the coverage of this issue, I’ve rarely (if ever) seen pointed out that proponents don’t adjust their numbers for inflation even though Taxpayers Association does that for their other pension analyses. So they’re distorting their own standards of analysis to double the supposed savings.

I’m getting tired of the focus in this mayoral campaign on the “pension crisis”. It’s the rightwing’s agenda, and meanwhile the myriad of other problems facing San Diego get ignored. Part of the plan of the community-labor coalition begun last year – called A Better San Diego – was to change the dialogue in this town, get it away from the issues of the conservatives, the rightwing power-brokers, the hoteliers, and other corporate interests that manage to run this place called San Diego. There are scandals going on, there are human needs not being met, there are environmental, nuclear, social, border, labor issues that ought to be addressed – but, noooo, let’s talk about the pension.

As Todd Gloria said last night, it is a right wing agenda to privatize San Diego. DeMaio and Co. want to make it so horrible to work for the City of San Diego that all city workers eventually leave so he can then privatize the entire city. Corporate giveaways all around!

But here’s the thing that really bothered me: Gloria talked about and emphasized the “pension debt problem,” but never once mentioned that there is a viable idea on how to effectively deal with it. And he wouldn’t mention it because it’s part of Filner’s plan, and since Filner hasn’t released his plan in any official, parsed through and analyzed capacity, he felt he couldn’t bring it up.

Someone PLEASE talk about refinancing the pension debt! ANYONE!!! It’s a legitimate alternative, and it’ll work! My question when Filner brought it up was whether or not San Diego had the credit rating to be able to do it and get a favorable interest rate, but as I found out, that won’t be a problem. There’s absolutely no reason it can’t be done.

One more thing, Frank: I do think that this pension debate is useful in that it gives us a terrific insight into how each of the candidates intends to govern. Largely through this debate we know that DeMaio is looking to dismantle government and privatize government services. Dumanis and Fletcher also both claim to support Prop B, but their support seems somewhat lukewarm. They’re not nearly as full throated about it as DeMaio is. They’ll likely at least keep an open mind (at least a little, but not entirely) when it comes to labor and employment issues. At least they pay lip service to workers’ rights and the general welfare of San Diego. And Filner is the complete polar opposite of DeMaio. So from that perspective, I do think it’s helpful.

The attack on Social Security by neoCons and Koch robots has been rejected nationally. And chances are an increasingly democratic San Diego will bury the local attempt by DeMaio to privatize government programs. After all, would you trust your money to a stock broker with a bunch of losers he’s looking to dump, or to a pension plan made safe from the raids of people like Golding and Murphy? And, if we have a surplus now, why is it so urgent that we do away with a public, as opposed to a private, pension plan?

After all, would you trust your money to a stock broker with a bunch of losers he’s looking to dump, or to a pension plan made safe from the raids of people like Golding and Murphy? And, if we have a surplus now, why is it so urgent that we do away with a public, as opposed to a private, pension plan?

Good questions. Until last night, I wasn’t aware that San Diego had a budget surplus (and I’ve yet to fact check that one, so as of now that’s still “information according to Todd Gloria.” He is/was the budget chairman, so I guess he would know. Sill, needs to be looked into.

But, if we do have a surplus, and are projected to have surpluses for the next several years, then the question should be asked, “Why is it necessary for such a radical proposal now in the first place?” The pension “crisis” has been effectively dealt with for the most part. But there’s still that mountain of pension debt to deal with. Lutar kept talking about “pension spiking,” which is a process whereby public employees somehow grant themselves large raises in the few years just prior to retirement in order to cash in on larger pension payments after retirement.

But it seems to me that since the pension itself has been brought under control due to measures put in place since 2008, San Diego’s credit rating is back in order, and the city’s finances are apparently well in order, then there should be more reasonable measures that we can take to deal with the remaining problems. Refinancing the debt seems like a good, reasonable first step. Capping pensions would seem to effectively mitigate spiking. And if you still need additional savings, then negotiate pay freezes with the unions, but guarantee certain annual bonuses in return. That way you can still curb pension costs and achieve the same savings as the Prop B pay freeze, and the city workers will still effectively earn a reasonable pay increase.

It really doesn’t seem all that hard to do, until you look at the real motivation behind Prop B.

Lutar ‘s statement that we must “shift the risk (of pensions) from the city to the city workers” is hypocritical or willfully ignorant and in either case is utterly contemptible.
City workers DO NOT receive Social Security. They pay into a defined a pension which met the guidelines for withdrawing from Social Security. Prop B does not include a return to Social Security, nor does it clearly delineate a hybrid alternative that combines a defined pension and a 401K.
All “risk” is not equal. Ms. Lutar probably pays into Social Security. Those of you reading this are probably paying into Social Security if you are still working. It is hypocritical to hold up private sector practices as the model, and then exact changes that do not square up with the model of Social Security + 401(K). Is it really ok to put the future of thousands of human beings into the hands of the same crooks who tanked the economy? That is contemptible.
San Diego has become a test case for right wing policies. If Prop B passes and is deemed legal ( big if) it will set a precedent across the whole country. That, dear friends, is the prize. And besides, it also gives them a chance to whack a city worker. A real two-fer.

Too bad it took ten years and Prop B to start a conversation on how to fix this pension problem. Too bad an alternative from the unions has never been presented and too bad there is no alternative on the ballot. I also think a hybrid alternative would work to resolve both the lack of Social Security and the risk to the taxpayers.

However, you are completely wrong in linking 401k (403b) plans to right wing politics, crooks, and a chance to whack city workers. Both 401k plans and pension plans invest in the economy and stocks. Since both 401k plans and pension plans can invest the same way, they have the same expected return. And yes 401k plan run the risk of poor performance during the times of poor economic but they also run the risk of superior performance during good economic times. (Risk in finance is a measure of deviation from the expected norm and can be either positive or negative.)

RB- you deny that there is a right wing agenda at work. Au contraire. The right clearly wants to privatize Social Security. What better way to begin dismantling SS than to have local municipalities and state governments adopt hybrid pensions? Carl DeMaio says there is an alternative to Social Security, and that is what I am hearing from you too. That is clearly an unraveling of New Deal policies and that is clearly the point. Embrace it please for what it is.
Prop B is breathtakingly punitive. And that is also the point. How else can you explain a two tiered benefit system in which librarians ( which by definition require a Masters in Library Science) receive a commensurate salary, but the pensionable rate is at a lower level. Really? That is misogynist in a female dominated profession. And that kind of two tiered system doesn’t exist in the private sector. (You get a raise for an advanced degree and your FICA goes up.) Or that a city worker can receive a pay increase for being bi-lingual, but that increase doesn’t count toward her pension.
The right would like to paint public employees as public enemy number one, as if they perform no needed function in our civic life. That is not only a lie but a damned lie. The sluggish economic recovery in this country is the result of layoffs in the public sector. But it isn’t that the right wing position to starve the public sector, render it ineffective and replace it with private sector remedies?
I worked for the city for 26 1/2 years. SDCERS, the entity which manages my pension, had a 20% return on their investments this past year. Tell me about your 401(k).

All accounts are up this year, the DOW index is up 24% over the last 12 months. The pension being up 20% this year is at best average. You always need to compare results to an index average to find out how well the account is being run. My 403b and Roth are up an average of 17% per year over 30 years.

Not to put too fine of a point on it “Lutar says, under Prop B city employees are still eligible for annual pay bonuses…” Let’s talk annual pay bonuses. There are no annual pay bonuses. There are step increases applied over a defined period of years. I was hired in 1984 as a Library Assistant. That position had a specified starting pay and over a number of years that position reached an upper limit that would never result in any further pay increase. http://apps.sandiego.gov/pjaol8/bulletins/2959.pdf What that means is that after the first five or so years I only received a pay increase if my union was able to negotiate a cost of living raise. So no, there are no annual bonuses. That is a lie. For what it is worth, the last cost of living increase I received was in 2oo5. I retired in 2oo9. I had reached the maximum limit of my salary in 1990. We need to have a serious talk about pension benefits. Ms Lutar clearly does not contribute to that conversation.

People keep saying that prop B won’t be any better and yet most successful private companies have the same 401k plans for their employees. Perhaps the only ones that don’t are the ones that have to be bailed out or go bankrupt (i.e. GM).

You kind of missed the entire point here, Zack. And you’ve apparently bought into the completely false equivalency that the proponents of Prop B are selling.

Let’s set aside for a moment the fact that the Independent Budget Analyst and the city auditor both found that switching to a 401k system will cost the city more money than the pension system, and that the savings that is estimated to be realized by Prop B comes entirely from the proposed pay freeze, and not from the 401k plan; let’s also set aside the fact that imposing specific wage levels on city workers via ballot initiative is illegal; and since Prop B can only be used (by Lani Lutar’s own admission) as a starting point in negotiations, the city is unlikely to realize anything CLOSE to what Prop B projects.

What’s getting lost in the discussion is that San Diego switched to a pension system and away from Social Security because they discovered that it would save the city money. City workers are not eligible for Social Security because the city (their employer) pays into a pension plan instead of Social Security. Private sector employers, in addition to the 401k plans that some (but not all) pay into, must also pay into Social Security, which costs employers more than pension payments alone in most cases. I have not seen any analysis that compares what the city pays now in pension benefits compared to what the city would pay in 401k + Social Security. Chances are that it would not come out in Prop B proponents’ favor.

There is also the question of what the city’s having to start paying into Social Security for its workers means: Will they owe back Social Security payments for current workers, or will it only apply to new employees? And how much will that cost? It’s possible that the city will have to go back and pay into Social Security for all current city employees dating back to their date of hire. No one really knows for sure how that will work yet.

The problem with the pension system has largely been fixed over the last five years. The problem that still persists, though, is the pension debt incurred from underfunding it in the first place. That can be dealt with rather easily without having to completely revamp the entire system by refinancing it. Switching to a 401k system will not make that debt go away.

Rather, what Prop B proponents object to is the fact that the city government has control and responsibility for the pension system. Detesting government as they do, what they want is to take as much responsibility away from government as possible. The plan only makes sense from an ideological standpoint if you’re a hard right Republican. It does not pencil out financially though, regardless of what Mr. DeMaio would have you believe. What DeMaio and the Lani Lutars of the city want is to see San Diego’s entire government operation privatized. They want to run government for the sole purpose of dismantling it.

I hate to see all the mayoral candidates beating the same horse, pension plans.

It’s one issue, but we need more than this faddish attention from all candidates. San Diego has many issues that need to be addressed, but if you want to talk about money, how about discussing how the city lets millions slip through its grasp every year by failing to follow up and collect on debtors.

Heck, the RNC still owes us money from their little party over a decade ago! Then there are parking tickets, fines, and other things the city isn’t trying to collect on.

I swear, the inefficiency, stupidity and just flat out corruption is so blatant, yet the sheep still bleat and trot behind these people despite the fact that it’s not in our best interest to keep shuttling money between the city and special interests.

““I just don’t understand why people are complaining when we save the city nearly $1 billion over 30 years. That’s money that goes back into the city’s coffers for road repairs and other city services,” said Lutar.”

OH REALLY? Road repairs, huh? When you gonna start? And how about replacing all those ancient cast iron sewer pipes BEFORE they break? “Deferred maintenance” is not efficient. I grew up in San Diego, and I tell you the current direction it is going, for corporations, for good ol’ rich boys, for special interests makes me sick.

Fire rings. Trash cans. Trying to cut things people who live here actually enjoy and use! We don’t belong here, I guess. But we can’t go home. We could take back our city, but demonstrations are a drag. Besides, we’re much too high.

Vern May 24, 2019 at 6:27 am on OB Town Council Gets Prepped on RoundUpadditional info: The Diet of the Adult Monarch Butterfly The Monarch butterfly feeds on nectar form various flowers including milkweeds,...

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